Investors welcome signs of possible deal in eurozone crisisHopes of a Greek deal after Monday’s summits appear not to have been immediately dashed, meaning markets are heading north again.The FTSE 100 is currently up 10.24 at 6835.91, while Germany’s Dax is 103 points or nearly 1% higher. The Athens market has climbed another 3% as investors remained optimistic that the latest set of proposals could finally form the basis of a deal between Greece and its creditors, thus releasing much needed bailout funds and avoiding a default. Tony Cross at TrustNet Direct said:The FTSE-100 is adding a little to yesterday’s gains as the trading session gets underway with investors continuing to buy into the idea that a Greek compromise can be found in the near term. Striking exactly the right balance however is going to be the difficult bit - if the concessions are too generous then the likes of Spain and Italy – who are struggling but also act as Greek creditors – will balk, whilst if there’s not enough on the table then voters in Greece will be left wondering what’s happened. In light of this, expect no let-up in the scrutiny the eurogroup is under in trying to agree terms here. Our channel checks lead us to believe that Smith & Nephew’s wound division is currently operating below its potential. We now see scope for divisional EBITA margins to increase to 33% in 2019 against 18.6% in 2014. We believe Smith & Nephew has been losing share in core wound care products for the past decade as management has been focused on the higher growth Negative Pressure Wound Therapy opportunity, yielding the market leader position to Mölnlycke. With a renewed focus on the US, catalysed by disappointing performance in the first half of 2014, Smith & Nephew could regain share and benefit from the significant operating leverage. We increase 2019 group earnings per share estimates by 11%, lift our price target to £12.75 [from £11.75] and upgrade to buy.The fact they’re about to splash the cash around is worrying investors... Reported performance didn’t inspire either. Continue reading...
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